updated 09:55 pm EDT, Wed September 28, 2011

Problems spotted on Windows Phone 7

Microsoft has quietly acknowledged a privacy problem with its Windows Phone 7 software, following a number of critical reports. The company posted information on its privacy pages admitting that its mobile OS exhibits "unintended behavior" by sending location information, such as details of nearby Wi-Fi access points and cell towers, even when a user declines to share such data.

A lawsuit filed earlier in the month accused the company of illegally collecting information. The issue was later confirmed by Windows Phone 7 jailbreaker Rafael Rivera, who showed that the camera app collects location data and sends the information to Microsoft's Live.net servers without permission.

Although the camera bug and a related issue with voice commands has been resolved with the Windows Phone 7.5 Mango update, the latest version contains similar behavior with the "Me" feature.

Microsoft promises to bring a full resolution with the next scheduled update, however a time-frame for the release has yet to be announced. The company suggests users can turn off location collection in the settings. [viaWinrumors]